The Side Hustle 08: I Break Down Geedup Co's $3m Day DaySep 10, 2023
Reading time: 2 mins 30 seconds.
I nearly choked on my pizza.
It was 6:30pm on a Friday night, or 'delivery day' as the team at Geedup call it. I was keeping an eye on my Shopify app while I was out with the family for dinner, I was logged in to the Geedup account, and let's just say I had to deactivate notifications pretty quickly, the sound of the cash register 'cha-chinging' was relentless.
A new collection, or 'drop' goes live at 6:30pm, roughly once a month. By my estimation, it was 6:32pm, and sales had already surpassed $1m. I resisted the urge to message the Geedup team, as they don't check results until 7:30pm on delivery day.
Fast forward about 6 hours, and they were on $3m. The best part was - that wasn't new for them. I posted about one of these drops on Instagram, and was inundated with questions.
Let's rewind about to about 2 years ago. I was chatting to Danny Chiha, of Kelly Partners Northern Beaches, and he told me about this brand that I just had to learn more about. I had a quick look, and having never heard of them, assumed they were probably pretty small - I come across a lot of businesses, so being introduced to a new one that's 'the next big thing' isn't strange.
Except this one was. Danny introduced me and asked me to do an audit of their business, which I did.
What I presented to them was a mixture of opportunity and chaos.
An LTV to AOV multiplier than obliterated anything I had seen previously.
A conversion rate that went for the ridiculously good to the ridiculously bad in days.
Multiple customers who had spent over $10,000 - even $20,000 with the brand over their relatively short lifetime (the brand ceased trading for a period, and then was rebooted).
No email marketing.
No SEO strategy or optimization.
A paid media budget under 10% of monthly revenue.
No Google ads.
A ROAS that obliterated anything I had seen before on 'delivery day'.
A ROAS that made $0 return when not on delivery day.
That's when I realised ROAS doesn't mean sh#t.
Let me explain:
Geedup starts marketing a delivery, or 'drop' 2-4 weeks before the launch date. 95% of the paid media spend occurs in that time frame, and given there's little to no stock available to buy, the call to action (CTA) is basically to sign up for early access to the drop. So, because there aren't many sales occurring, the ROAS is wildly unprofitable.
But they don't care about ROAS, and that's a lesson for all of us. They don't judge a collection by what sort of ROAS they get, they judge it, in founder Jake Paco's words, by "how many pissed off customers we have".
In other words, they bring their customers to the boil for 2-4 weeks before the launch, they then lock the website the day of the launch, providing a passcode to access the collection early to their VIPs that have signed up by email or SMS. In that time frame, their VIPs are trained to know that the stock is 100% going to sell out - and they go crazy. By the time the website opens at 6:30pm to the general public, the stock is nearly gone.
Geedup is a great juxtaposition. It should carry more stock and replenish it to grow revenue in the short term, but it also shouldn't, to protect it's brand in the long term.
Jake, will always ensure a drop sells out. Could he sell more? Undoubtedly. I think he could add $5m to his annual revenue in the blink of an eye - but he won't. He understands, the pissed off consumers are crucial. He wants people to miss out - it drives the value in the brand. Think about the auction you miss out on, when you're looking to buy a house - You're almost guaranteed to bid more than you should at the next one.
The same rule applies here. Some resellers buy items from the drop, and you'll see it online at double the price the next week, on a reseller website.
The other great learning for me here, is the power of cash. Now, that seems obvious, but get this; Almost always, 100% of the products sell out, and Geedup doesn't replenish inventory, when it's gone, it's gone. What that means is, they have maximised their ROI on their initial outlay on tock, in roughly 24 hours.
With favourable payment terms that come from showing manufacturers exponential growth and trust, they're also never outlaying a dollar for the stock.
So when you see the fancy cars, watches, and the lifestyle, you can be sure that it's been paid for in full.
This has driven me to focus a lot on the power of a cash positive business, because revenue on paper, or even profit on paper, doesn't really help you eat lobster instead of tinned tuna - it's cash that pays the bills.
I talk a lot of about marketing before the drop, not after - after all it can take between 30-70 days for the average brand, to convert a browser to a customer - the purchase consideration period. Geedup have perfected the art of teasing out the product range, teaming it with paid media, seeding it to key people (mainly themselves), and driving hype like no other brand to the point where the consumers erupt the moment the range goes live.
So remember, before you worry too much about your ROAS, your email marketing, or your SEO, ask yourselves, how pissed off would your customers be if they missed out - if the answer is 'not very', then you need to work harder on your brand. ROAS is never the strategy, it's the outcome - and by it's nature, in the brand building, hype building phase, you shouldn't be worried about your ROAS.
I never thought I would say this, but here's to upset customers!
Till next week,
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